Details of Secret IP Agreement Confirm Tech Industry Fears

BY CCIA Staff

April 21, 2010

The just-released details of the once secret Anti-Counterfeiting Trade Agreement confirm fears that the agreement will unreasonably increase the legal exposure of U.S. technology and Internet businesses operating abroad, the Computer & Communications Industry Association said, after reviewing the declassified text. The document was made public today after governments involved bowed to intense public pressure and incessant leaks and disclosed a draft of the secret agreement to reshape online copyright law.

According to CCIA’s analysis, the proposed language in ACTA compels other countries to increase intellectual property penalties — without mandating any protections found in U.S. law that shield U.S. technology and Internet companies. These details indicate that ACTA is not consistent with the commitment to a balanced copyright expressed by U.S. officials at a recent assembly of the World Intellectual Property Organization (WIPO).

The following statement can be attributed to CCIA President & CEO Ed Black:

“As we feared, ACTA will worsen the trend of international courts penalizing U.S. companies for products and services that are perfectly legal here. This agreement exports the strong penalties found in U.S. copyright law without also exporting those essential protections like fair use that provide much needed balance. An agreement that says, “please punish our tech companies” will not be good for U.S. trade.

“ACTA is not a trade agreement. It is an anti-trade agreement that closes foreign markets for U.S. tech companies. For 37 years CCIA has been pro trade and opposing ACTA is pro trade.

“Those defending ACTA insist it doesn’t change US law. But it exports the most insidious parts of our digital copyright law and makes the protections and consumer-oriented parts of it optional.

“It appears some level of public scrutiny and oversight is leading to slight changes in the language here and there. But what is missing from this document is a real understanding of the dangers they are so zealously trying to counter, and the cost to customers’ privacy and freedom, technology companies and innovation by exporting copyright law on steroids to these nations.”

The following statement may be attributed to CCIA Executive Vice President Erika Mann, director of CCIA’s European office:

“We expect that the Commission will make good on its public commitment to ensure that the final text of ACTA contains no ‘three strikes’ obligations.” The current language does not replicate the controversial French law that would cut off Internet access to those accused of infringement. But it does say countries can force Internet Access Providers to cut off Internet access to customers for alleged copyright infringement. We would hope other language requiring penalties be proportional to violations could counter this. But unfortunately that language appealing to reasonableness is under debate.”

“ACTA is a plurilateral agreement. It will be the first and a new kind of international trade agreement, which effect IPR national law making and which is negotiated outside of WTO or WIPO. The effects are completely unknown. The only agreement which was ever tried before and which had a similar outreach was the MAI (Multilateral Agreement on Investment). That failed badly, first in the WTO and afterwards in an OECD environment.

“While we appreciate finally having the text to know what’s in this far-reaching plan to police for copyright violations, we would urge governments, particularly the United States and the EU, to make their country negotiating positions available.”

Here is CCIA’s summary of what ACTA would do based on the document:

ACTA aggressively exports the strictest provisions of U.S. intellectual property law, ensuring that intellectual property rights holders will have numerous avenues available for protecting IP law in ACTA-compliant countries, but also fails to mandate the protections in U.S. intellectual property law that have promoting innovation, competition, and free expression in the United States.

Border guards can search luggage for iPods containing illegal material, but this latest ACTA language allows countries to limit the law to avoid searches of travelers’ personal luggage.

A provision under debate requires penalties be proportional to the violation. This could possibly be used to argue against extreme fines or cutting off Internet access. It is particularly telling that a requirement in the agreement that “measures, procedures and remedies shall also be fair and proportionate” is in bracketed text. This suggests that the negotiating parties cannot agree on whether to require that remedies be fair and proportionate, which suggests that at least one delegation wants to maintain the flexibility to impose remedies that might be unfair and disproportionate.

— Relatively consistent with U.S. law, ACTA provides that:

Internet Access Providers will be forced to take a more active role in policing for copyright violations. (It appears nothing prevents countries from forcing IAPs to cut off Internet service to customers to prevent copyright violations.)

IAPs would not be automatically liable for content users place on their site. But this safe harbor provision is contingent on the adoption of policies that target unauthorized storage and transmission of copyrighted materials. The immunity for IAPs is also contingent on a takedown process if copyright violations are reported.

Consumers may be punished for bypassing Digital Rights Management locks on the products they buy. (While permitting exceptions and limitations to copyright according to their own laws, ACTA mandates little in the form of consumer protection.)

Rightsholders are to be permitted an injunction even before a violation has occurred if they can show that a violation is imminent.

Troublingly, ACTA encourages, and may mandate, “pre-established” or statutory damages. These fixed-sum awards encourage copyright trolling, and lead to extraordinary jackpot awards against tech innovators, even in the absence of any harm. Because ACTA does not mandate any of the technology protections like fair use that characterize U.S. law, it threatens U.S. technology companies doing business abroad that rely on those protections with extreme liability.

Just as problematic, ACTA proposes to mandate criminal liability in certain IP infringement cases, but it would not mandate the protections against liability for tech innovators that are found in U.S. law. As we have already seen, foreign courts are too willing to apply criminal liability to online service providers for the wrongdoing of users. ACTA, therefore, increases the likelihood of foreign courts unjustly punishing innovative U.S. businesses.

— The proposed response to liability issues appears in footnote 47, which states: “Parties also understand that the application of third party liability may include consideration of exceptions or limitations to exclusive rights… including fair use, fair dealing, or their equivalents.” (emphasis supplied) Yet even this permissive, non-binding language is apparently opposed by at least one delegation. This non-binding language will not adequately protect U.S. businesses operating overseas. A regime of mandatory criminal penalties and optional protection for intellectual property defendants will result in unbalanced foreign IP law.

— ACTA contains bracketed proposals to expand notice & takedown under the Digital Millennium Copyright Act to other forms of intellectual property. If implemented, this text would vastly expand the reach of notice & takedown and require Congress to reopen the DMCA.

— The anti-circumvention provisions of the argument seem to contradict the current interpretation of Title I of the DMCA, which, according to the Federal Circuit, requires evidence of a nexus to infringement before a circumvention claim may be sustained. As it lacks such a provision, ACTA would seem to mandate liability where U.S. federal courts have exonerated defendants.Visit CCIA’s ACTA Resource Page for more details

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